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Colorado Industries Get Incentives for CHP

January 12, 2015 By Linda Hardesty

factoryIn a late December ruling, the Colorado Public Utilities Commission approved Public Service Company of Colorado, a subsidiary of Xcel Energy, to provide financial incentives to industrial facilities that convert waste heat to power, a type of combined heat and power (CHP).

The ruling, a first for the state, places cogeneration technologies alongside better-known renewables like wind, solar, biomass and geothermal. CHP produces electricity with no added emissions and no added fuel.

The ruling allows Xcel Energy to pay an incentive of about $500 per kilowatt of the recycled energy. The incentive is paid over 10 years, which reduces the payback period on a company’s initial investment.

The ruling also allows Xcel Energy to count up to 20 MW of recycled energy per year through 2016 toward its goals of 30 percent renewable energy by 2020 under the Renewable Energy Standard originally adopted by the state legislature in 2007. Individual projects can be as large as 10 MW. There is no minimum project size.

Industrial and manufacturing sectors such as steel, glass, metals, chemicals, oil and gas, cement, bakeries and pipeline compressor stations often have operations suited to energy projects. The incentives help make affordable the cost of turning a wasted resource—excess heat from operations—into energy that can be used onsite or sold.

Photo: Manufacturing plant via Shutterstock

2 comments on “Colorado Industries Get Incentives for CHP

  1. Thank you for highlighting the opportunity for recycled energy in Colorado, known in the industry as waste heat to power (WHP). It’s great to see Xcel Energy providing incentives for these terrific projects that use a waste resource to generate power with no additional fuel and no incremental emissions. While it’s true “the incentives help make affordable the cost of turning a wasted resource – excess heat from operations – into energy that can be used onsite or sold” and that “industrial and manufacturing sectors such as steel, glass, metal, chemicals, oil and gas, cement, bakeries and pipeline compressor stations often have operation suited to [recycled energy] projects,” the article confuses recycled energy (or WHP) with CHP cogeneration technologies. To clarify:

    1. WHP is not best described as “a type of combined heat and power (CHP)” (first sentence). While some WHP applications are bottoming cycle cogeneration, a type of CHP, most WHP applications are not, including heat from boilers, turbines, incinerators, thermal oxidizers, engines, compressors, dryers, process heaters, exothermic reactions, thermal distribution systems, and pressure drop associated with pipelines.

    2. The ruling does not “place cogeneration technologies alongside the better known renewables like wind, solar, biomass and geothermal” (second sentence). The ruling places only recycled energy or WHP alongside the better known renewables; there are many cogeneration technologies that do not qualify for this financial incentive. Note that 17 states, including CO, include WHP as a renewable resource in their renewable energy standards. Contact the Heat is Power Association for a list of states and their incentives or check the website for additional info.

    3. The third sentence of the article states “CHP produces electricity with no added emissions and no added fuel.” This is incorrect. CHP produces both heat and power from a single fuel source, dramatically lowering energy use and associated emissions. CHP can produce one-half the carbon emissions of the separate generation of heat and power to deliver the same amount of useful energy. It would be correct to write “WHP (waste heat to power), called recycled energy in CO, produces electricity with no added emissions and no added fuel.” The distinction is important: CHP is highly efficient power generation while WHP generates power with no added emissions and no added fuel.

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